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Safeguard Processes

Date: February 12, 2014Author: Jeff

Safeguard processes protect the Factory Process to ensure it is not being abused. These activities ensure that you are doing the “right” things right. The high velocity of the transactions flowing through the Factory Process means that problem transactions can be completed before it is known that they are problems. This can lead to all manner of problems. Let’s use the following example to illustrate various safeguards to a factory process.

This is tax season in the United States. Taxpayers are voluntarily computing their final tax bulls for the preceding year and are squaring their accounts with the IRS. Some people owe a little more and some people paid too much during the year and are due a refund. The IRS has implemented an electronic filing system that relies on independent software developers and web hosters to help taxpayers through the process. This results in a system (the Factory Process) that allows the IRS to process a very large number of tax returns very quickly with little human intervention.

The IRS spot checks taxpayer accounts using the dreaded tax audit. The IRS will select a taxpayer and ask him to visit them and bring his tax returns and records for for a designated number of past filings. The IRS will comb through those records and determine whether the taxpayer’s filing present an honest account of reality. This is a Safeguard process for the IRS. The threat and execution of these audits protect the Factory Process by encouraging the taxpayers to provide honest accounting of their tax years.

Unfortunately, tax audits only protect the system from real, honest taxpayers who can be located once the IRS decides to audit them. There is an increasing business of defrauding the IRS by filing returns for non-existent taxpayers or for taxpayers whose identities have been stolen and having the IRS deposit a refund amount in a bank account from which the money can be immediately swept beyond their reach. This scheme depends on forged documentation that is processed before its veracity is checked. The IRS is now using more prospective methods of identity verification and cross checking employer records against employee claims. These too are Safeguard processes because they help prevent the processing of fraudulent transactions.

So you see, Safeguard processes can be placed anywhere within the Factory Process. Edits and cross checks are prospective or in-line Safeguards. Audits are retrospective Safeguards. Both types help the IRS collect and retain the maximum amount of revenue owed by taxpayers. It is very important to find and utilize every means to protect the Factory Process from abuse.